San Francisco Frontiers - EU-US trade deal hopes buoy stocks

Investors have benefitted in recent weeks from bets that governments will eventually hammer out pacts with Donald Trump ahead of the US president's August 1 deadline to avoid steeper levies.

"The positive sentiment generated by the trade deal agreed between the US and Japan continued to permeate the markets," said AJ Bell investment director Russ Mould.

This was boosted further by "optimism surrounding trade talks between the US and EU", said Joshua Mahony, chief market analyst at Rostro trading group.

On Wall Street, both the S&P 500 and Nasdaq set new all-time highs at the start of trading, although the Dow slid lower.

"There is underlying enthusiasm for more trade deals being struck before the August 1 deadline, and, once again, some relief grounded in the understanding that the reciprocal tariff rates for key trading partners may not be as onerous as advertised," said market analyst Patrick O'Hare at Briefing.com.

London's FTSE 100 gained 0.8 percent, lifted also by a stream of robust earnings, including from consumer goods group Reckitt, mobile phone giant Vodafone and Lloyds bank.

Frankfurt rose, along with most other European stocks, as the European Union and Washington appeared close to a deal that would set a baseline 15-percent levy on EU goods, down from a threatened 30 percent.

Paris fell, however, dragged down by a drop in luxury stocks and disappointing earnings from fossil fuel giant TotalEnergies.

A European Commission spokesman said Thursday that he believed a trade deal with the United States is "within reach".

According to multiple diplomats, the deal could waive tariffs on aircraft, lumber, pharmaceutical products and agricultural goods.

The bloc, however, is still forging ahead with contingency plans in case talks fail, with member states approving a 93-billion-euro ($109-billion) package of counter-tariffs on US goods.

Meanwhile, the European Central Bank left interest rates unchanged, as widely expected, as higher US tariffs hang in the balance.

In its rates announcement the ECB said that the economic environment remained "exceptionally uncertain, especially because of trade disputes".

The euro failed to gain much traction following the rate decision, but it did perk up after ECB President Christine Lagarde said Thursday the bank was monitoring the dollar-euro exchange rate but had no target.

The euro has surged almost 14 percent against the dollar since the start of the year, boosted by investors dumping US assets in the face of Trump's impetuous policymaking and attacks on the US Federal Reserve.

The euro's appreciation helps contain inflation but could harm European exports and thus slow already sluggish economic growth.

In Asia, stocks advanced with Tokyo adding more than one percent, building on a more than three percent surge Wednesday on the back of the Japan-US trade deal.

Hong Kong and Shanghai also rose.

Banking stocks gained in Europe after a flurry of earnings reports were received well by the market.

Shares in Tesla dropped around nine percent as trading got underway in New York after the company reported a 16 percent drop in quarterly profits.

- Key figures at around 1330 GMT -

New York - Dow: DOWN 0.7 percent at 44,691.43 points

New York - S&P 500: UP 0.2 percent at 6,369.28

New York - Nasdaq Composite: UP 0.3 percent at 21,083.82

London - FTSE 100: UP 0.8 percent at 9,130.31

Paris - CAC 40: DOWN 0.6 percent at 7,800.92

Frankfurt - DAX: UP 0.1 percent at 24,268.55

Tokyo - Nikkei 225: UP 1.6 percent at 41,826.34 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 25,667.18 (close)

Shanghai - Composite: UP 0.7 percent at 3,605.73 (close)

Dollar/yen: UP at 146.74 yen from 146.47 yen on Wednesday

Euro/dollar: DOWN at $1.1772 from $1.1777

Pound/dollar: DOWN at $1.3547 from $1.3579

Euro/pound: UP at 86.90 pence from 86.68 pence

West Texas Intermediate: UP 1.2 percent at $66.01 per barrel

Brent North Sea Crude: UP 0.9 percent at $69.15 per barrel

burs-rl/sbk

E.Walker--SFF